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Taxpayers to finance Hwy. 401 service centre makeovers

By John SpearsBusiness ReporterDanny GallagherSpecial to the Star

Thu., June 17, 2010

Zero to $200 million in three months.

That’s how Ontario taxpayers’ commitment has grown toward financing the reconstruction of nearly all the service stations with direct access to Highways 401 and 400.

No one had expected the massive job to be quick or easy.

But motorists who are now enduring bladder-busting gaps between service centres as they close for renovations were originally told that the company awarded the contract to rebuild and run the stations would pay the bill.

“The province will not have to invest taxpayer dollars into redeveloping and maintaining this vital government service,” a question-and-answer section of the Ministry of Transportation website said in February.

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Then in April, when a contract was awarded to Host Kilmer Service Centres – a partnership that includes the Toronto Maple Leafs’ part-owner Larry Tanenbaum – Host Kilmer said it was on the hook for about $100 million of the $300 million redevelopment cost.

The rest of the money – $200 million – will come from the public purse. Government officials now say the province will “fully recover” its investment over the life of the 50-year deal through a revenue-sharing agreement. They will not disclose details.

Host Kilmer, meanwhile, trumpets in a press release that it will rake in revenue of $100 million a year from operating the service centres – or $9 billion over the life of the agreement.

The Star asked the office of Transportation Minister Kathleen Wynne why the province is now financing two-thirds of the renovation cost. The inquiry was referred to ministry spokesman Bob Nichols, who replied in writing.

“Responses to the tender indicated that operation of the centres was not as remunerative as initially estimated,” he said.

“Negotiations with bidders were undertaken at the height of the lending crisis, which also made operating the service centres less attractive.”

Nichols would only say that payments to the government under the revenue sharing agreement may vary from year to year so it is impossible to tell how soon the province will be repaid.

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Gilles Bisson, transportation critic for the opposition New Democrats, said the new arrangement is not transparent.

“There’s a fundamental question to be asked: Should the province be in the business of providing this service?” said Bisson.

“I say yes; some will say no. If you say yes, then run it. If you say no, then privatize the damn thing.”

Instead, he said, the hybrid deal leaves too much unclear.

Few motorists would disagree that the 23 service centres along the big highways need work. Food courts were dingy, and washrooms aging, showing the wear and tear of serving highways travelled by more than 500,000 people a day.

The three oil companies who had held the leases for the stations were no longer interested in the centres because of “the age of the sites and the potential operating risks,” said ministry spokeswoman Emna Dahak.

Due to decisions made decades ago, the operating agreements are all expiring in rapid succession.

As the old agreements run out, the oil companies who held the concessions have to take out the old underground fuel tanks and clean up any contaminated soil – a job that takes up to nine months.

Conservative transportation critic Frank Klees said the closures have been badly handled.

“There are too many service centres not open,” said Klees. “In the high summer season, there aren’t enough of them open.”

Faye Lyons of the Canadian Auto Association said the centres needed the attention to serve motorists.

“At the end of the day they’re going to have new service centres that are going to provide them with much better service, and better quality of buildings,” she said.

The association did have concern about the gaps between centres as they began to close for renovations, and met with ministry officials earlier this year.

The ministry improved signage to warn motorists in areas where they faced large gaps between centres, Lyons said.

At the moment, nine service centres are fully open, and nine closed. Five are partially open, with washrooms, water, telephones and vending machines, but no fuel.

Seven more sites are due to open with partial services in July 2010 and be fully operational by September 2010.

Work on the remaining centres will continue into 2013. Three of the 23 service centres were renovated in the 1990s and are not part of the current cycle, but will be reviewed before 2018.

Once the environmental clean-up is finished, Host Kilmer moves in to demolish the old restaurants, and rebuild.

Host Kilmer is a partnership between Maryland-based HMSHost Corp., which operates turnpike service stations in the U.S., and Tanenbaum’s Kilmer Van Nostrand Co. Ltd.

Host Kilmer awarded the gasoline concession at all 23 service centres to Canadian Tire, which will operate its own stores on the site and sell fuel under the company’s Gas+ brand.

The roster of food court suppliers will also change. Tim Hortons remains, but Mr. Sub will not.

The new centres are designed by Quadrangle Architects of Toronto and will be environmentally friendly, meeting LEED standards set by the U.S. Green Building Council. The food court building features sloped glass walls, sloped metal roofs, earthy colours, tile floors, wooden canopies and stone veneer.

“The building is made of natural stone and wood, which reflects traditional Ontario architecture,’’ said Anna Madeira, Quadrangle’s project architect.

“We spent considerable time and effort in designing it so that water consumption will be reduced substantially in the washrooms which are a big part of these centres.

“For example, we have used waterless urinals in the men’s washrooms and we have specified low-flow faucets in the lavatories. The plant species are local species and have been chosen to endure without permanent irrigation.”

Madeira said energy-efficient glazing allows for natural light in both customer seating areas and the interior areas. At night, the light of the atrium will act as a traveller’s beacon.

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